Republicans lead a proposal to cut taxes on income and corporations, while Democrats emphasize spending on infrastructure and health care.
By Rose Hoban
On Tuesday, at a press conference in the General Assembly building in Raleigh, lawmakers presented their proposals on how to allocate state dollars for the upcoming state fiscal year beginning July 1st.
Governor Roy Cooper unveiled his $ 27.3 billion spending plan in late March. And usually at this point in the legislative work session, lawmakers in the Senate and House of Representatives have tabled budget proposals from their chambers and withdrawn behind closed doors to negotiate which lines of their budgets will prevail in the final budget. of the State.
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As in so many things, this year is developing differently in the legislature, but some things remain consistent: Republicans in the Senate introduced a plan to cut taxes, including the 2028 corporate tax cut, with a firm “no” when it comes to the possibility of expanding Medicaid.
“We are in … still the effective, but initial, phases of the Medicaid transformation and I think we should give it a chance to work,” said Paul Newton (R-Mt. Pleasant), chair of the Committee on Senate Finance, which anchored the Republican press conference.
Newton referred to an independent Medicaid policy to move from one service-based fee-based program to another where private insurance companies pay a flat rate per patient to provide services to about 1.7 million of the 2.4 millions of state Medicaid recipients.
For their part, Senate Democrats have unveiled a plan to strengthen broadband, add slots to pre-K and the Medicaid Innovations waiver that provides improved services to people with disabilities.
And Democrats called on their legislative counterparts to expand Medicaid.
“We can’t afford to wait any longer,” said Sen. Mike Woodard (D-Durham). “We have waited eight years here to expand. We waited. We’ve been talking about transformation for five years, transformation is on our doorstep, it’s time to move on and expand now. ”
The opening gambit of the Republicans means a wide reduction in taxes for individuals and families, reducing the personal income tax rate from 5.25% to 4.99% and increasing the level in that a person does not pay any income tax from $ 21,500 to $ 25,500.
“We are also proposing to increase the child tax deduction by $ 500,” Newton said during the press conference. “A family earning less than $ 40,000 a year would receive a deduction of $ 3,000 per child and the amount decreases above the income chain until it reaches zero for a family earning more than $ 140,000.”
Newton argued that for families of four who earned less than $ 38,000, their state taxes would be reduced by about half. According to a tax calculator released by the state income department, a family with two adults and two dependent children earning that amount would see about $ 340 coming out of their current $ 683 tax record.
The same family that earned a state median income of $ 54,000 would see, on average, a 21 percent tax cut, or $ 314, from its current tax burden of about $ 1,500. And a family earning $ 218,000, which is four times the average income, would see a $ 700 reduction, or 6.9 percent, in state taxes.
Newton said the cut would reduce state revenues by about $ 1 billion a year and argued the plan would primarily benefit lower-income families. He argued that his plan to phase out the corporation tax, which is currently the lowest in the southeast, by 2028, would reduce state revenue by only about half a billion annually.
While health care is not an important part of the Republican tax cut package, there are some aspects of the plan that could affect health. The plan will make it easier to deduct from your pocket the medical expenses of people who have many.
Currently, to deduct copayments, coinsurance, and other out-of-pocket health care expenses, a person must spend more than $ 10,000. Under the Republican plan, that flat would be reduced to $ 7,500 a year in spending.
All in all, it would reduce state revenue by about $ 23 million a year.
Another small provision included in the tax plan is the increase in excise taxes paid by online cigar sellers. However, the plan does not envisage changing the tax rate on cigarettes. At $ 0.45 per pack, North Carolina has the third lowest cigarette tax rate in the United States
Democrats talk about budget
In the afternoon, Democrats took to the same podium to talk about their plan to invest part of North Carolina’s state surplus in infrastructure and education, not to mention tax cuts.
Senator Gladys Robinson (D-Greensboro) set several Cooper budget priorities, which include programs to connect people with housing, transportation and food aid. His plan also included rental grants and initiatives to create housing for people with disabilities.
Cooper’s budget plan would also increase the number of Medicaid Innovations waiver spaces by 520, taking just one bite on the waiting list of 15,000 ten-year services for people with disabilities.
But Democrats’ top priority was to increase access to health care by expanding the Medicaid program, a policy that was made possible by the Affordable Care Act. According to the Kaiser Family Foundation, the current unsecured rate in the state is around 12.9%, a few percentage points higher than the national average of 10.4%.
“Based on the American Rescue Plan, we would receive an additional $ 1.7 billion in federal funds to support this expansion without the state covering any cost share for up to six years,” Robinson said. “There is no excuse in our minds and there should be no excuses in the minds of our colleagues as to when to move on.”
A recent Commonwealth Fund report found that the expansion would create about 83,000 jobs in North Carolina, with 43,300 of those jobs in health. The analysis predicted that the expansion would reduce the number of uninsured people by about 379,000, with several hundred thousand more moving from private insurance to Medicaid records. All in all, state Medicaid enrollment would increase by more than 600,000 people.
The Commonwealth study, conducted by economists at George Washington University, estimated that enacting the policy would generate about $ 5.9 billion in annual federal spending in the state and lead to about $ 141 million in additional tax revenue, at a cost of $ 628 million a year. .
When asked about the Republican idea of waiting to see how the transformation of Medicaid into managed care would occur before driving expansion, Senate Minority Leader Dan Blue (D-Raleigh) to say Democrats are already waiting eight years.
“We can save rural hospitals and we could increase the capacity to do telemedicine and other things,” he said. “And then look at this year, when the national government has put in so many sweeteners and knows they pay us to expand Medicaid that paid the full cost in the early years.”
Blue said he hoped his Republican Senate colleagues would be willing to come down the aisle to commit and create a budget that Democrats could vote for.
“We hope we have a budget that doesn’t have so many poisonous pills and we can’t swallow it. And I don’t know what those poison pills can be, “Blue said.” I certainly hope we don’t get any of the big surprises that haven’t been alerted so far. “